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THE MINISTRY OF FINANCE

THE MINISTRY OF FINANCE

CIRCULAR No. 87-TC/VT ON THE 27th OF OCTOBER 1994 PROVIDING GUIDANCE ON THE REGIME OF STATE FINANCIAL MANAGEMENT OF AID FROM NON-GOVERNMENTAL ORGANIZATIONS (NGO's)

In furtherance of Decision No. 80-CT on the 28th of March 1991 of the Chairman of the Council of Ministers (now the Prime Minister) stipulating for aid relations with Non-Governmental Organizations;

In implementation of Decree No. 20-CP on the 15th of March 1994 of the Government on the Regime of Management and Use of Official Development Aid;

After discussing and reaching agreement with the State Planning Committee, the Office of the Government, and the Vietnam Union of Friendship Organizations, the Ministry of Finance gives the following guidance on the regime of State financial management of aid from Non-Governmental Organizations (NGO's);

I. GENERAL PRINCIPLES

1. Aid from Non-Governmental Organizations in all forms-in kind, in foreign currencies, in Vietnamese dong - must be subject to the regime of management of the State budget, must be promptly and fully registered in the State budget, and used for the right purpose and the right project, in accordance with the commitment with aid donors, and with the current regime of State financial management.

2. According to Decision No. 80-CT of the Government, non-governmental aid shall be distributed and used as follows:

- Aid valued under 50,000 USD shall be decided by the Ministers or Presidents of the People's Committees of provinces or cities.

- Aid valued from 50,000 to 200,000 USD shall be decided by the Minister of Finance (after consulting with the Vietnam Union of Friendship Organizations).

- Aid valued above 200,000 USD: The Ministry of Finance shall consult with the State Planning Committee and the Vietnam Union of Friendship Organizations, and submit their proposal to the Prime Minister for decision.

All goods listed on the import ban must be submitted to the Prime Minister for ratification before their ordering.

All instances of development aid must have their project documents expertized and ratified by the authorized level. Such documents must indicate:

- The purpose of the project.

- The phases of activity of the project.

- The plan for budget allocations to each part: experts, training, equipment, materials and goods, and a balance fund (if any).

- The project executor and the project controlling agency:

3. The Vietnam Union of Friendship Organizations shall cooperate closely and regularly with the Ministry of Finance and synthesizing agencies of the Government in providing information on the activities of Non-Governmental Organizations, on aid projects and the delivery of aid, in order to manage and use the aid in accordance with the current policy, with the purposes, and with the commitments with aid donors.

4. The ministries, agencies and organizations at the Center (hereunder referred to as ministries), the People's Committees of the provinces and cities directly under the Central Government shall have to direct, supervise and manage the portions of aid in projects owned by themselves or their affiliates.

The financial services in the provinces and cities directly under the Central Government shall help the Minister of Finance and the People's Committees of provinces and cities manage the aid directly donated by Non-Governmental Organizations to the locality, or distributed by the ministries and branches at the Center to the locality.

II. SPECIFIC STIPULATIONS

The regime of State financial management of Non-Governmental Organizations' aid is stipulated as follows:

1. The plan for aid revenue and expenditure

Every year, the units concerned shall have to draw up their aid plan and their budgetary revenue and expenditure plan, and send them to the financial office of the same level (the units under central management shall send them to the ministries and agencies at the Center, the units under local management shall send them to the financial office).

The revenue and expenditure plan for the aid is based on:

- The commitment documents, or memorandums of understanding of Non-Governmental Organizations with the unit on the aid granted according to projects or on emergency aid.

- Notices on the distribution and use of aid sent to the aid receivers by their controlling agencies.

- Decisions on the distribution and use of non-governmental aid issued by the authorized level as stipulated at Pont 2, Part I of this Circular.

Funding for the planning, reception and management of aid is stipulated for each type of units as follows:

+ The production and business units shall use their self-procured capital.

+ The administrative and public service units shall include their requirements in their annual budgetary expenditure plans, except for those projects directly designed or funded by aid donors (in foreign currencies or Vietnamese Dong).

Under no circumstance shall a unit use aid money to pay salaries or allowances to those cadres taking part in the project without a written approval by the authorized level.

2. Taking delivery of aid and managing it

A. Certifying aid in goods or in foreign currencies:

The certification of aid in goods or in foreign currencies is the basis for filling the procedures of receiving goods, withdrawing money and settling payment with the State Budget. The form for certification of aid money and goods shall be uniformly issued by the Ministry of Finance.

When they receive notices of arrival of aid goods or money, the units entitled to receive and use the aid must fill the procedures at the Ministry of Finance (the Commission for Management and Reception of International Aid) or the Representative Offices of the Commission in Ho Chi Minh City and Da Nang, including the cases in which the aid donors directly order local goods for delivery to the aid receivers.

The certification of aid goods or money shall be based on:

- The documents stipulated in Document No. 254/TC-VT on the 18th of July 1991 of the Ministry of Finance on the procedures for reception of money in foreign currencies and goods granted as international aid, including:

+ The memorandum of understanding (commitment) on aid, or the notification of aid by the aid donors, organizations or individuals.

+ Documents or vouchers specifying the source of foreign exchange, the quantity and value of goods granted as aid by the aid donors.

+ A document issued by the host Ministry or the People's Committee of the province or city concerned under the Central Government, approving the plan for distribution and use of money in foreign currencies or goods granted as aid.

+ A ratification paper from the authorized level as stipulated by the Government for assignment of responsibilities mentioned at Point 2, Part I.

+ A bill of landing by sea or by air, a detailed inventory, a commercial invoice and an insurance certificate (for aid in foreign currencies).

In case one unit agrees to receive the aid to distribute it to other units, it must have a plan of aid distribution to each aid user, and a mandate from the aid donor (or from the aid receivers).

- In case the aid donors order locally made goods for the aid receivers, certification is based on the original copies of the sale invoices and delivery bills concerning the lot of goods delivered to the receivers, made by the seller according to the forms issued by the Ministry of Finance.

- In case the aid donors directly deliver the aid money or goods to the receivers, the latter must send a money receipt or goods receipt to the Commission for Management and Reception of International Aid or its representatives, for registration in the State budget.

B. Payment through the State Budget:

The voucher of receipt of aid goods or money declared by the aid receiver is the voucher for payment through the State Budget.

The rate of payment for aid money or goods is the value of the foreign exchange or goods converted into Vietnamese Dong at the buying rate announced by the Commercial Bank at the time of certification of the aid goods or money (or according to the selling price of goods written in the delivery bill, in case the aid donor orders locally made goods).

In case the goods received reveal disparities (in excess, deficient, or not conforming to the category and price of the goods listed...), or the sum of money received is higher or lower than what has already been certified, the unit concerned must send an expertise paper (or a report on the receipt of money) to the aid-certifying agency to consider and amend the expertise paper within 45 days after the aid was first certified.

In case the aid goods do not have a price tag in the currency of the donor country, or in convertible foreign currency for the change into Vietnamese Dong, the Ministry of Finance (the Commission for Management and Reception of International Aid) shall temporarily set a price for the aid on the certification paper. Within 45 days after the certification of the aid, the unit concerned must set up an inventory and evaluation board with the participation of the financial service of the same level to set a price for the aid according to the price level of equivalent goods, and send a copy of the set price to the agency that first certified it, so that it can amend the certification paper according to the price temporarily set by the unit.

Past the above-mentioned time limit, if the units concerned do not modify the price and quantify of goods, the Ministry of Finance shall base itself on the declaration first made by the units concerned as voucher to register revenue, expenditure and payment through the budgets a different levels.

The Ministry of Finance (the Commission for Management and Reception of International Aid) shall fill the procedure for payment through the State Budget of the value of the aid money or goods for the aid receivers, according to the following principles:

- Registering receipt for the State Budget, registering expenditure equivalent to the value of the aid money or goods for the ministries, agencies at the Center, and the provinces and cities where the aid receivers are recognized as administrative and public service units, or are unable to retrieve capital.

- Registering receipt for the State Budget, registering loans, and making loan and payment contracts for development aid projects carried out by production and trading units, and for the loan rotating fund.

The financial management of this aid must conform to the contents of the documents signed with aid donors and the current regime of management of the Vietnam State.

C. Accounting for the source of aid:

While using aid, the units concerned must promptly and fully account for all sources of aid (money and goods) in books or vouchers, according to the current stipulations of the State in the Ordinance on Accounting and Statistics, and the Regulations on Organization of Accounts as well as the regime for accounting aid money and goods.

In case the value of aid goods or money is adjusted, the units concerned shall base themselves on the official payment vouchers sent by the financial office of the same level to make adjustments to the receipt of aid in their books.

D. Making final statements on the balance of accounts and reports on implementation work:

Every year and whenever a project is terminated, the aid receivers and users must make reports and final statements on the balance of accounts for the aid money and goods, and send them to the project owner and the financial service of the same level.

- The project owner shall have to make a full account for each project and integrate it into the total account of the State budget allocations, and report it to the financial service of the same level and the controlling agencies concerned.

The report on the use of aid includes:

+ The results of the reception of aid money or goods (quantity and value of each category).

+ The use of aid for each project and each specific work.

+ Details on the use of funds for drawing up and managing the project.

+ Evaluating the results in implementing the targets of the project and the efficiency in the use of aid, and suggesting measures to settle the problems concerned.

- When a project is terminated and if the fund is not fully spent, the unit concerned must report this to the host agency. The host agency shall have to cooperate with the financial office of the same level to consider and decide on its use.

3. Inspection and supervision by financial officer at different levels:

The financial offices at different levels shall have to regularly check and supervise the process of receiving and using non-governmental aid by the units.

While checking and supervising the implementation of projects by the units concerned, the financial offices at different levels must strictly handle or petition the Ministry of Finance to promptly handle any deliberate violations of the current regime of financial management. At the same time, they must guide and assist the units concerned to promptly settle any international disputes arising in the process of receiving and using aid.

III. IMPLEMENTATION PROVISIONS

1. Any violation of the Statute on the management and use of international aid shall be deal with in accordance with the law in force.

The aid users, which fail to report on the implementation of their aid projects and the efficiency in the use of aid, shall not be considered for expanding the aid project or receiving a new project.

2. This Circular takes effect as from the date of its signing. All stipulations on the regime of financial management which are contrary to this Circular are now annulled.

In the process of implementation, if any problem arises, the branches, levels and grass-roots units should promptly report it to the Ministry of Finance (the Commission for Management and Reception of International Aid), which shall consider and submit it to the authorized level for decision.

For the Minister of Finance

Vice- Minister

PHAN VAN TRONG